When the buyer takes on debt, that debt expands the supply of money. It also anticipates that the buyer will turn her time, treasure and talent into cash over the next few years in order to pay it back. As she turns her future into money she repays the money that paid for her future.
Meanwhile the money circulates, enabling others to convert time, treasure and talent into cash. In turn, they circulate cash to purchase the products of others' time, treasure and talent. Beautiful sculptures emerge from gray lumps. Farmers grow crops. Service providers exchange services. Builders build buildings. Manufacturers manufacture. The economy hums along, providing prosperity for all. Until it no longer does. See John Law, tulipmania and the dot.com collapse.
For now, this is mainly the way we do money. The implications are extraordinary.
Real estate becomes cash, our money supply. Money enables our world to function. Without it, the world as we know it ceases to exist. None of this is possible without survey stakes. They enable civilization as we know it. Ultimately, they are the bedrock of our clients' financial futures. Scary but true.
Richard B. Wagner, JD, CFP, is the principal of WorthLiving LLC, based in Denver.